| I | Fifth letter of a Nasdaq stock symbol specifying that it is the third preferred bond of the company. |
| IBC's money fund report average | Report giving the averageyield of all major money market funds. |
| IBES | See: Institutional Brokers Estimate System |
| IBF | See: International Banking Facility |
| I-bonds | Treasury savings bonds with a 30-year maturityindexed to account for inflation. |
| IBRD | See: International Bank for Reconstruction and Development |
| IC | See: Information Coefficient |
| ICC | See: International Chamber of Commerce |
| ID | The two-character ISO 3166 country code for INDONESIA. |
| IDC | See: Interest During Construction |
| Identified shares | Stock or mutual fund whose purchase date and price may be identified for capital gains and tax purposes when shares sold. |
| Idiosyncratic Risk | Unsystematic risk or risk that is uncorrelated to the overall market risk. In other words, the risk that is firm-specific and can be diversified through holding a portfolio of stocks. |
| IDR | The ISO 4217 currency code for the Indonesian Rupiah. |
| IDR | See: International Depository Receipt |
| IE | The two-character ISO 3166 country code for IRELAND. |
| IEP | The ISO 4217 currency code for the Irish Punt. |
| IFC | See: International Finance Corporation |
| I-I page | In over-the-countertrading, same as H-H page, but exclusively for OTC stocks. |
| IL | The two-character ISO 3166 country code for ISRAEL. |
| Illegal dividend | A corporation's dividend that is declared in violation of its charter and/or of state laws, typically because of the way it is calculated. |
| Illiquid | In the context of finance. absence of cash flow needed to fulfill financial debts and meet obligations. In the context of investments, describes a lightly tradedinvestment such as a stock or bond that is not easily converted into cash. |
| ILS | The ISO 4217 currency code for the Israeli Shekel. |
| Imbalance of orders | Used for listed equity securities. Too many market orders of one kind-buy or to sell or limit orders to buy up or sell down, without matching orders of the opposite kind. An imbalance usually follows a dramatic event such as a takeover, research recommendation, or death of a key executive, or a government ruling that will significantly affect the company's business. If it occurs before the stock exchangeopens, trading in the stock is delayed. If it occurs during the trading day, the specialist halts and then suspends trading (with floor governor's approval) until enough matching orders can be found to make an orderly market. |
| IMF | See: International Monetary Fund |
| IMM | See: International Monetary Market |
| Immediate family | Term used in the NASD rules of fair practice to refer to one's parents, brothers, sisters, children, relatives supported financially, father-in-law, mother-in-law, sister-in-law, and brother-in-law. |
| Immediate or canceled order (IOC order) | Market or limited price order that is to be executed in whole or in part as soon as such order is represented in the trading crowd. The portion not executed is to be treated as canceled. A stop is considered an execution in this context. See: AON order, FOK order. |
| Immediate payment annuity | An annuitycontract paid by a single payment and with a specified payment plan that starts immediately after the contract is purchased. |
| Immediate settlement | Delivery and settlement of securities within five business days. |
| Immunization | The construction of an asset and a liability match that benefits from offsetting changes in value. |
| Immunization strategy | A bondportfolio strategy whose goal is to eliminate the portfolio's risk, in case of a general change in the rate of interest, through the use of duration. |
| Impaired capital | When a company's total capital is less than the par value of all its capital stock. |
| Impaired credit | Result of a borrower's reduced credit rating. |
| Imperfect market | Economic environment in which the costs of labor and other resources used for production encourage firms to use substitute inputs that less costly. |
| Implicit Bankruptcy Costs | Opportunity costs incurred prior to the bankruptcy process such as the loss of sales or financing. |
| Implicit tax | Lower or higher before-tax required returns on assets that are subject to lower or higher tax rates. |
| Implied call | The right of the homeowner to prepay, or call, a mortgage at any time. |
| Implied repo rate | The rate that a seller of a futures contract can earn by buying an issue and then delivering it at the settlement date. Related: Cheapest to deliver issue. |
| Implied volatility | The expected volatility in a stock's return derived from its option price, maturity date, exercise price, and riskless rate of return, using an option pricing model such as Black-Scholes. |
| Import Quota | Puts limits on the quantity of certain products that can be legally imported into a particular country during a particular time frame. There is a Fixed quota, which is a maximum quantity not to be exceeded, and tariff rate surcharge, which permits additional quantities but at much higher duty. |
| Import substitution development strategy | A development strategy followed by many Latin American countries and other LDCs that emphasize import substitution-accomplished through protectionism-as the route to economic growth. |
| Import/export letters of credit | Bank or financial institution issuance's of funds in a certain amount provided to facilitate international trade. |
| Imputation tax system | Arrangement by which investors who receive a dividend also receive a tax credit for corporate taxes that the firm has paid. |
| Imputed interest | Used in accounting to refer to interest that has effectively been paid to a bondholder, even though no money has actually been paid. |
| Imputed value | Refers to the value of an asset, service, or company that is not physically recorded in any accounts but is implicit in the product, e.g., the opportunity cost of cash remaining in a savings account and not invested. |
| IN | The two-character ISO 3166 country code for INDIA. |
| In & out | Refers to over-the-countertrading. Trade in which the trader has both the buyers and sellers lined up for a clean trade. See: Cross |
| In between | Used in the context of general equities. Priced higher than the bid price but lower than the offer price. See: In the middle |
| In competition | Indication that the customer has revealed trading interest to multiple brokers and that the trade will take place with the firm having the highest bid or lowest offer. Antithesis of exclusive. |
| In hand | Used in the context of general equities. Firm indicating control of a bid, offer, or order. |
| In play | Often used in risk arbitrage. Company that has become the target of a takeover, and whose stock has now become a speculativeissue. |
| In the box | Means that a dealer has a wire receipt for securities, indicating that effective delivery on them has been made. |
| In the hole | Used in the context of general equities. Below the inside market when one is attempting to sell the stock; at a significant discount. Antithesis of premium. |
| In the middle | Used in the context of general equities. At a price exactly in between the bid and offerprices. |
| In the tank | Used in the context of general equities. Slang expression meaning marketprices are dropping rapidly. |
| In touch with | Used in the context of general equities. Having a sell inquiry in a stock (not a firm customer sell order), often entailing a capital commitment. Antithesis of looking for. |
| Inactive asset | Asset not used in a productive manner at all times. |
| Inactive post | Trading post on NYSEfloor where inactive, lightly tradedstocks are traded in 10-sharelots as opposed to 100-share lots. |
| Inactive stock/bond | A security that trades in very small volume on a daily basis. See:Illiquid. |
| In-and-out trader | A daytrader, or a speculator who buys and sells the same security on the same day. |
| Incentive fee | Compensation paid to commoditiestrading advisers or to any practitioner who achieves above-averagereturns. Sometimes called performance fee. |
| Incentive Stock Option (ISO) | An Option that has met certain tax requirements entitling the optionee to favorable tax treatment. Such an option is free from regular tax at the date of grant and the date of exercise (when a non-qualified option would become taxable). If two holding period tests are met (two years between grant date and sale date and one year between the exercise date and sale date), the profit on the option qualifies as a long term capital gain rather than ordinary income. If the holding periods are not met, there has been a "disqualifying disposition". |
| Incestuous share dealing | Trading of shares between companies in order to create a tax or financial benefit for the companies involved. |
| Incipient default | Potential default. |
| Income baskets | Category to which certain income is allocated. Losses in one basket may not be used to offsetgains in another basket. Specified in U.S. tax code. |
| Income beneficiary | One who receives income from a trust. |
| Income bond | A bond whose payment of interest is contingent on sufficient earnings. These bonds are commonly used during the reorganization of a failed or failing business. |
| Income dividend | Any payout to mutual fundshareholders resulting from interest, dividends, or other income. |
| Income exclusion rule | The IRS rule that excludes certain types of income from taxation, e.g., welfare payments. |
| Income fund | A mutual fund that seeks to provide to liberal current income from investments. |
| Income immunization strategies | Methodologies adopted to insure adequate future cash flow. |
| Income investment company | A management company focused on managing a mutual fund whose primary purpose is income generation, typically investing in bonds and high dividend yielding stocks. |
| Income limited partnership | A limited partnership whose main goal is income generation, e.g., real estate, oil equipment. |
| Income property | Real estate purchased for the reasons of income generation. |
| Income risk | The possibility that a portfolio'sdividends will decline as a result of falling interest rates. Income risk is generally greatest for money marketinstruments and short-termbonds, and least for long-term bonds. |
| Income statement (statement of operations) | A statement showing the revenues, expenses, and income (the difference between revenues and expenses) of a corporation over some period of time. |
| Income stock | Common stock with a high dividend yield and few profitable investment opportunities. |
| Income tax | A state or federal government's levy on individuals as personal income tax and on the earnings of corporations as corporate income tax. |
| Incontestability clause | Clause in a life insurance contract preventing the insurer from revoking the policy after it has been in force for a year or two. If the life insurance company discovers any important facts that the policyholder may have concealed, such as experiencing a stroke. |
| Inconvertibility | The inability of a local currency to be exchanged for another currency. Often includes transfer risk. |
| Incorporated joint venture | A joint venture in which the legal means of dividing the project's equity by shareholdings in a company. |
| Incorporation | A legal process through which a company receives a charter and the state in which it is based allows it to operate as a corporation. |
| Incorporeal hereditament | A right arising out of or annexed to land, for example sporting rights and easements. |
| Incoterms | Trade terms used worldwide to specify seller and buyer obligations in shipments against international salescontracts. These terms are adopted by the International Chamber of Commerce (ICC) for international movement of merchandise. Since they in themselves are not law, they must be specified if desired in quotations, sales contracts, purchase orders and commercial invoices. |
| Increased costs clause | A clause stating that where a change in regulatory requirements raises the cost to the lender of making or maintaining the loan, or reduces its effective return, then the borrower will compensate the lender. |
| Incremental cash flows | Difference between the firm's cash flows with and without a project. |
| Incremental cost of capital | Average cost applicable to the issue of each additional unit of debt and equity. |
| Incremental costs and benefits | Costs and benefits that would occur if a particular course of action is taken, compared to those that would have obtained if that course of action had not been taken. |
| Incremental internal rate of return | Internal rate of return (I.R.R.) on the incremental investment from choosing a larger instead of a smaller project. |
| Indemnification | Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from lawsuits pertaining to their conduct. |
| Indemnify | Used in insurance policy agreements as to compensation for damage or loss. Hold harmless |
| Indemnity | A legal obligation to cover a liability, however arising. |
| Indenture | Agreement between lender and borrower that details specific terms of the bondissuance. Specifies legal obligations of bond issuer and rights of bondholders. An indenture spells out the specific terms of a bond, as well as the rights and responsibilities of both the issuer of the security and the holder. |
| Independent auditor | A certified public accountant operating outside the company who can provide an accountant's opinion. |
| Independent broker | NYSE member who executesorders for floor brokers and firms other than its own. |
| Independent investments | Investments available to a firm that may be selected individually or in groups because each investment is different in its nature and purpose. |
| Independent project | A project whose acceptance or rejection is independent of the acceptance or rejection of other projects. |
| Independent variable | Term used in regression analysis to represent the element or condition that is expected to influence another (so-called dependent) variable. |
| Index | Statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month. Indexes measure the ups and downs of stock, bond, and some commoditiesmarkets, in terms of market prices and weighting of companies in the index. |
| Index and Option Market (IOM) | A division of the CME established in 1982 for tradingstock index products and options. |
| Index arbitrage | An investment trading strategy that exploits divergences between actual and theoretical futures prices. An example is the simultaneous buying (selling) of stock indexfutures (i.e., S&P 500) while selling (buying) the underlying stocks of that index, capturing as profit the temporarily inflated basis between these two baskets. Often, the point at which profitability exists is expressed at the block call as the number of points the future must be over or under the underlyingbasket for an arbitrage opportunity to exist. See: Program trading. |
| Index fund | Investment fund designed to match the returns on a stock market index. Mutual fund whose portfolio matches that of a broad-based index such as the S&P 500 and whose performance therefore mirrors the market as represented by that index. |
| Index futures | A futures contract on an index (such as a foreign stock index) in the futures market. |
| Index method | Technique to calculate rates of return that is based on initial and terminal values. |
| Index model | A model of stock returns using a marketindex such as the S&P 500 to represent common or systematic risk factors. |
| Index option | A call or put option based on a stock marketindex. |
| Index swap | A swap of a market index for some other asset, such as a stock-for-stock or debt-for-stock swap. |
| Index warrant | A stock indexoptionissued by either a corporate or a sovereign entity as part of a securityoffering, and guaranteed by an option clearing corporation. |
| Indexed bond | Bond whose payments are linked to an index, e.g., the consumer price index. |
| Indexed rate | An interest rate linked to an index, usually the CPI. |
| Indexed Stock Options | Options that have an exercise price which may fluctuate above or below market value at performance options in that the exercise price of indexed options typically remains variable until the option is exercised. |
| Indexing | A passive instrument strategy calling for construction of a portfolio of stocks designed to track the total return performance of an index of stocks. |
| Indexing plus | See: Enhanced indexing |
| Indicated dividend | Total amount of dividends that would be paid on a share of stock over the next 12 months if each dividend were the same amount as the most recent dividend. Usually represented by the letter "e" in stock tables. |
| Indicated yield | The yield, based on the most recent quarterly rate times four. To determine the yield, divide the annual dividend by the price of the stock. The resulting number is represented as a percentage. See: Dividend yield. |
| Indication | (1) Notice given by a dealer (through Autex) or customer of an interest in buying or selling stock, sometimes including specific volume and price; (2) approximation of where a specialist sees buy and sell interest to tighten the range to an opening price. |
| Indication of interest | A dealer's or investor'sinterest in purchasing (not commitment to buy) securities that are still in the underwriting stage and are being registered by the Securities and Exchange Commission. |
| Indication pricing schedule | A statement of rates for an interest rate or currency swap. |
| Indicator | Used in the context of general equities. Technical or fundamental measurement that securities analysts use to forecast the market's direction, such as investment advisorysentiment, volume of stock trading, direction of interest rates, and buying or selling by corporate insiders. |
| Indifference curve | The expression in a graph of a utility function, where the horizontal axis measures risk and the vertical axis measures expected return. The curve connects all portfolios with the same utility. |
| Indirect Claim | Claim of a financial intermediary; the intermediary relends funds to the deficitunit to enable it to acquire real assets. |
| Indirect costs of financial distress | Costs such as lost business as a result of bankruptcy or liquidation. |
| Indirect diversification benefits | Diversification benefits provided by the multinational corporation that are not available to investors through their portfolio investment. |
| Indirect Exchange Rate | The foreign currency price of one unit of the home currency. |
| Indirect method | Reporting in the statement of cash flow that adjusts or reconciles net income to cash from operations. |
| Indirect quote | For foreign exchange, the number of units of a foreign currency needed to buy one US dollar. |
| Indirect terms | The price of a unit of domestic currency in foreign currencyterms. See: Direct terms. |
| Individual Retirement Account (IRA) | A retirement account that may be established by an employed person. IRA contributions are tax deductible according to certain guidelines, and the gains in the account are tax-deferred. |
| Individual Retirement Account (IRA) rollover | A provision of the law governing IRA's that enables a retiree or anyone receiving a lump-sum payment from a pension, profit-sharing, or salary reduction plan to transfer the amount into an IRA. |
| Individual tax return | A tax return filed by an individual to account for their personal income and taxes payable. |
| Inductive reasoning | The attempt to use information about a specific situation to draw a conclusion. |
| Industrial production | A statistic determined by the Federal Reserve Board focusing on the total output of all US factories and mines on a monthly basis. Used as an economic indicator. |
| Industrial revenue bond (IRB) | A bondissued by local government agencies on behalf of corporations. |
| Industrials | General term used in the financial markets to refer to companies manufacturing, producing, or distributing goods and services. |
| Industry | The category describing a company's primary business activity. This category is usually determined by the largest portion of revenue. |
| Industry allocation | Investment of certain proportions of a portfolio in certain industries. Sometimes called sector allocation. |
| Inefficient portfolio | Group of assets dominated by at least one other portfolio under the mean variance rule. For example, if A has both lower return and higher volatility than B, we say A is dominated by B. |
| Infant industry argument | Argument that industries in the developing and emerging sectors of the economy need protection against international competition in order to establish themselves. |
| Inflation | The rate at which the general level of prices for goods and services is rising. |
| Inflation accounting | Accounting practices allowing for the effects of inflation. |
| Inflation hedge | Investments designed to hedge against inflation and the loss of purchasing power associated with it. |
| Inflation risk | Also called purchasing power risk, the risk that changes in the real return the investor will realize after adjusting for inflation will be negative. |
| Inflation uncertainty | The fact that future inflation rates are not known. It is a possible contributing factor to the makeup of the term structure of interest rates. |
| Inflation-escalator clause | A clause in a contract providing for increases or decreases in inflation depending on fluctuations in the cost of living, production costs, and so forth. |
| Inflation-indexed securities | Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity. |
| Inflexible expenses | Expenses that cannot be adjusted or eliminated such as car payments or rental payments. Antithesis of flexible expenses. |
| Information Agent | Agent whose primary task is to disseminate and explain the details of capital transactions. |
| Information asymmetry | Condition that information is known to some, but not all, participants. |
| Information Coefficient (IC) | The correlation between predicted and actual stockreturns, sometimes used to measure the contribution of a financial analyst. An IC of 1.0 indicates a perfect linear relationship between predicted and actual returns, while an IC of 0.0 indicates no linear relationship. |
| Information content effect | The rise in the stockprice following a dividendsignal, or publication of some other related news. |
| Information costs | Transactions costs that include the assessment of the investment merits of a financial asset. Related: Search costs. |
| Information memorandum | A document detailing the project and project financing, usually in connection with a syndication. |
| Information Ratio | The ratio of annualized expected residualreturn to residual risk. A central measurement for activemanagement, value added is proportional to the square of the information ratio. |
| Information services | Organizations that furnish investment and other types of information, such as information that helps a firm monitor its cashposition. |
| Information Signaling | Conveying intelligence through a firm's actions. A firm's dividend policy, for example, provides signals to investors concerning the value of the firm's stock. |
| Informational efficiency | The speed and accuracy with which prices reflect new information. |
| Informational efficiency | The degree to which market prices correctly and quickly reflect information and thus the true value of an underlying asset. |
| Informationless trades | Trades that are the result of either a reallocation of wealth or an implementation of an investment strategy that acts only on existing information. That is, an investor might sell a large block of stock -- not because they have information that leads them to think the stock will fall in value -- but because they might need the cash for some other investment. |
| Information-motivated trades | Trades in which an investor believes he or she possesses pertinent information not currently reflected in the stock's price. |
| Infrastructure | Matters such as drains, sewers and roads serving a property. |
| Infrastructure | A country's fundamental system of transportation, communications, and other aspects of its physical capabilities. |
| Infrastructure risk | The risk associated with the impact on project cash flows from infrastructure problems. Also known as transportation risk. |
| Ingot | A bar of metal such as the type that the Federal Reserve System uses to store gold reserves. |
| Inheritance tax return | Tax form required to determine the amount of state tax due on an inheritance. |
| In-house | In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. Although a listed trade must be taken to the floor of the stock exchange, matching supply with demand within the confines of the firm results in higher commissions for the firm. |
| In-house processing float | The time it takes the receiver of a check to process a payment and deposit it in a bank for collection. |
| Initial filing | Has various meanings. It could refer to a form that is filed with the Securities and Exchange Commission in advance of a major event, such as a public offering or a share repurchase. It could also refer to filings that occur before legal inside transactions. |
| Initial margin | (1) Amount of money deposited by both buyers and sellers of futures contracts to ensure performance of the terms of the contract; (2) amount of cash or eligible securities required to be deposited with a broker before engaging in margin transactions. |
| Initial margin requirement | When buying securities on margin, the proportion of the total market value of the securities that the investor must pay for in cash. The Security Exchange Act of 1934 gives the Board of Governors of the Federal Reserve the responsibility to set initial margin requirements, but individual brokerage firms are free to set higher requirements. In futures contracts, initial margin requirements are set by the exchange. |
| Initial public offering (IPO) | A company's first sale of stock to the public. Securities offered in an IPO are often, but not always, those of young, small companies seeking outside equity capital and a public market for their stock. Investors purchasing stock in IPOs generally must be prepared to accept considerable risks for the possibility of large gains. IPOs by investment companies (closed-end funds) usually include underwriting fees that represent a load to buyers. |
| Initial Public Offering Spinning | The practice of an investment bank setting aside portions of a corporation's Initial Public Offering for senior management of that corporation. |
| Initiate coverage | (1) Firm is now followed by analysts at a particular securities house; (2) Indication to covershort position by purchasing the underlying stock (this cancels out the short position). |
| Inland Bill of Lading | A document used as a receipt from the carrier to shipper that covers the transport of goods overland. It also acts as a contract of carriage. |
| In-line | Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. |
| Input-output tables | Tables that indicate how much each industry requires of the production of each other industry in order to produce each dollar of its own output. |
| Inquiry | Used in the context of general equities. In-line expression of interest in a particular stock, usually asking the firm to bid for or offerstock. |
| INR | The ISO 4217 currency code for the Indian Rupee. |
| In-service withdrawal | A participant-initiated withdrawal from an employer-sponsored retirement plan while the participant is still employed by the company. |
| Inside market | Refers to over-the-countertrading. Best (highest) bid and best (lowest) offer, often used in the O.T.C. Market. See: In-line. |
| Insider information | Material information about a company that has not yet been made public. It is illegal for holders of this information to make trades based on it, however received. |
| Insider trading | Trading by officers, directors, major stockholders, or others who hold private inside information allowing them to benefit from buying or selling stock. |
| Insider Trading & Securities Fraud Enforcement Act of 1988 (ITSFEA) | Federal legislation that greatly increased the penalties for trading on material inside information. |
| Insider Trading Sanctions Act of 1984 | Act imposing civil and criminal penalties for insider trading violations. |
| Insiders | These are directors and senior officers of a corporation-in effect, those who have access to inside information about a company. An insider also is someone who owns more than 10% of the voting shares of a company. |
| Insolvency practitioner | An individual who has qualified as an insolvency practitioner under the Insolvency Act 1986. Only qualified insolvency practitioners may be appointed as administrators, administrative receivers, liquidators or supervisors of voluntary arrangements. A fixed charge receiver does not need to be an insolvency practitioner although there is some pressure now to require it. Fixed charge receivers are generally surveyors. Most insolvency practioners are accountants or solicitors. |
| Insolvency risk | The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk. |
| Insolvent | A firm that is unable to pay debts (its liabilities exceed its assets). |
| Inspector(s) of Election | The person(s) appointed by the Corporation to act as a judge on voting matters brought before a shareholder meeting. The inspector determines which proxies and ballots are in good form, and acceptable to be voted. They also count and record the votes, supervise and inspect the counting process and attest to the final results. They cannot be overruled on these matters, although they have no voice in the procedural aspects of the meeting itself. |
| Inspector's or Judge's Certificate | A form provided by the Corporation, and completed by the Inspectors of Election, attesting to the final voting results and percentages of a shareholder meeting. |
| Installment payments | Distribution of plan assets to beneficiaries based upon a regular schedule. |
| Installment sale | The sale of an asset in exchange for a specified series of payments (the installments). |
| Instinet (Institutional Networks Corporation) | Computerized subscriber service that serves as a vehicle for the fourth market. "Instinet" is registered with the SEC. As a stock exchange it numbers among its subscribers a large number of mutual funds and other institutional investors linked to each other by computer terminals. The system permits subscribers to display bids and offers (which are exposed system wide for whatever length of time the initiating party specifies) and to consummate trades electronically. Instinet is largely used by market makers, but, nonmarket makers and customers have equal access. |
| Institutional broker | A broker who buys and sells securities for institutional investors such as banks, and mutual funds, pensions. |
| Institutional Brokers' Estimate System (IBES) | Service that assembles analysts' estimates of future earnings for thousands of publicly traded companies, detailing how many estimates are available for each company and the high, low, and average estimates for each. |
| Institutional investors | Organizations that invest, including insurance companies, depository institutions, pension funds, investment companies, mutual funds, and endowment funds. |
| Institutional lease | A lease generally acceptable to an institutional investor, such as a pension fund or insurance company. During the 1970s and 1980s it was a 25 year FRI lease with no breaks and upward only rent reviews every five years, giving the landlord considerable control over the tenant. Now terms of 10 to 15 years are common and landlord’s controls have been relaxed. The upward only rent review remains. The requirements of institutional investors tend to be more stringent on the grant of a new lease than when buying investment property already subject to leases. |
| Institutionalization | The gradual domination of financial markets by institutional investors, as opposed to individual investors. This process has occurred throughout the industrialized world. |
| Institutions | Insurance companies, pension funds, trusts, foundations, mutual funds, funds managers, bank investment departments. |
| Instrumentality | Notesissued by a federal agency whose obligations are guaranteed by the full-faith-and-credit of the government, even though the agency's responsibilities are not necessarily those of the US government. |
| Instruments | Financial securities, such as money marketinstruments or capital market instruments. |
| In-substance defeasance | Process through which debt is removed from the balance sheet but not canceled. |
| Insurable interest | An insurance term referring to the relationship between a policy's insured person or property and the potential beneficiary. The beneficiary must have an insurable interest in the insured person or property to receive payment of the policy if the insured died while the policy was in force. |
| Insurance | Guarding against property loss or damage making payments in the form of premiums to an insurance company, which pays an agreed-upon sum to the insured in the event of loss. |
| Insurance agent | The insurance company representative and adviser who sells insurance policies. |
| Insurance broker | A broker, independent of any insurance company, who represents the interests of the buyer in searching for insurance coverage at the lowest cost and providing the highest benefit to the buyer. |
| Insurance claim | A claim for reimbursement from the insurance company when the insured has suffered a loss that is covered under an insurance policy. |
| Insurance dividend | Money paid annually to policyholders participating in cash value life insurance policies. |
| Insurance policy | A contract detailing an insurance policy and outlining what risks are insured, what insurance premiums are to be paid by the policyholder, what deductibles prevail, and all the details associated with a policy. |
| Insurance premium | Payments calculated by the insurance company based on risk factors that must be made by the insured to guarantee protection of property loss under an insurance policy. |
| Insurance principle | The law of averages. The average outcome for many independent trials of an experiment will approach the expected value of the experiment. |
| Insurance settlement | The payment of proceeds by an insurance company to the insured to settle an insurance claim within the guidelines stipulated in the insurance policy. |
| Insured | The property or persons covered by an insurance policy. |
| Insured account | A bank or financial account that is insured for the benefit of the depositor, protecting against loss in the event that the savings institution becomes insolvent. See: FDIC. |
| Insured bond | A municipal bond backed both by the credit of the municipal issuer and by commercial insurance policies. |
| Insured plans | Defined benefit pension plans that are guaranteed by life insurance products. Related: Non-insured plans |
| Insured Trade Acceptance | A trade acceptance where the buyer's ability to pay is insured. |
| Intangible asset | A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual property, patents, copyrights, and trademarks are examples of intangible assets. |
| Integer programming | Variant of linear programming in which the solution values must be integers. |
| Integrated financial market | A market in which there are no barriers to financial flows, and the same risk asset commands the same expected return, irrespective of domicile. |
| Intellectual property rights | Patents, copyrights, and proprietary technologies and processes that may be the basis of a company's competitive advantage. |
| Inter vivos trust | A trust created between living persons. Antithesis of a testamentary trust. |
| Interbank market | Financial institutions exchange of currencies between and among themselves. |
| Interbank rate | See: LIBOR |
| Interbank spread | The difference between a bank's offer and bid rates for deposits in the Eurocurrency market. |
| Intercommodity spread | In the commoditiesmarket, a spread consisting of a long position and a short position in different but related commodities for example, speculating that the price relationship between the two commodities will change, e.g., platinum and gold. |
| Intercompany loan | Loan made by one unit of a corporation to another unit of the same corporation. |
| Intercompany transaction | Transaction carried out between two units of the same corporation. |
| Inter-creditor agreement | An agreement between creditors usually governing how those creditors will act in relation to the debtor, especially as to enforcement of security. |
| Interdelivery spread | Used in futures or options market to refer the purchase of one month of a contract and selling another month in the same contract, in the hope that the price difference will widen or narrow, depending on the investment. |
| Interest | The price paid for borrowingmoney. It is expressed as a percentage rate over a period of time and reflects the rate of exchange of present consumption for future consumption. Also, a share or title in property. |
| Interest coverage ratio | The ratio of earnings before interest and taxes to annual interest expense. This ratio measures a firm's ability to pay interest. |
| Interest coverage test | A debt limitation that prohibits the issuance of additional long-term debt if the issuer's interest coverage would, as a result of the issue, fall below some specified minimum. |
| Interest deduction | An interest expense, such as interest on a margin account, that is allowed as a deduction for tax purposes. |
| Interest during construction | Interestaccumulated during construction period, which usually equals capitalized interest. |
| Interest equalization tax | Tax on foreign investment by residents of the US which was abolished in 1974. |
| Interest expense | Interest expense is the money the corporation or individual pays out in interest on loans. |
| Interest in Arrears | Interest that is due only at the maturity date rather than periodically over the life of the loan. |
| Interest on interest | Interest earned on reinvestment of each interest payment on money invested. See: compound interest. |
| Interest payments | Contractualdebt payments based on the coupon rate of interest and the principal amount. |
| Interest ratchet | Variation of interest rate depending on performance of borrower. |
| Interest rate | The monthly effective interest rate. For example, the periodic rate on a credit card with an 18% annual percentage rate is 1.5% per month. |
| Interest rate agreement | An agreement whereby one party, for an up-front premium, agrees to compensate the other at specific time periods if a designated interest rate (the reference rate) is different from a predetermined level (the strike rate). |